Four Things to Remember When Trading the Australian Jobs Report Read more

If you’re hoping to trade the news this week, then you might want to take a closer look at the upcoming Australian jobs release (Thurs, 1:30 am GMT) and start figuring out how to make pips off the event. Here are some things you should keep in mind about this report:

1. Weaker hiring gains expected

For the month of December, a mere 5.3K increase in hiring is expected, far weaker compared to November’s 42.7K gain and October’s 13.7K rise. In this case, the report would indicate a sharp downturn in employment, which could weigh on Australia’s spending and growth figures later on.

A quick review of the latest releases suggests that there is no clear trend when it comes to the country’s employment figures. Then again, forex market watchers have attributed this to the change in survey methodology, which has seen numerous revisions in future releases.

2. Unemployment rate to stay at 12-year high?

With a weak pickup in hiring expected, Australia’s jobless rate is unlikely to budge from its 12-year high of 6.3%. The good news though is that part of the increase in the unemployment rate was spurred by a rise in the participation rate, which simply means that more Australians are returning to the labor force to resume their job hunt.

Of course short-term forex traders are likely to react to the headline figures, which suggests that the Aussie might sell off if the jobless rate posts another increase. Just make sure you take a look at the underlying data, particularly at the labor force participation rate, to see if there are any signs of improvement.

3. Concerns on underemployment

The rise in underemployment has been a bit concerning for the Land Down Under, as a huge chunk of November’s increase in hiring was comprised of part-time jobs. In fact, only 1.8K full-time jobs were added then, with the the total number of hours worked falling by 0.3% in the same month.

The Australian Bureau of Statistics estimated that underemployment climbed to 8.6% in November, up by 0.3% from the previous period. The bureau also reported that roughly 15% of the working age population were receiving a lower pay rate than they would like.

4. AUD/USD reaction

Previous releases indicate that AUD/USD is usually unable to sustain its initial price reaction to the report. After all, short-term forex traders are probably reacting to the headline figures only to see that the underlying data paints a different picture. Apart from that, market participants might be booking profits by the end of the Asian trading session, triggering a reversal around the start of the London session.